Foreign Buyers Flock to Sun and Sand States

Foreign Buyers Flock to Sun and Sand States

U.S. housing prices are starting to creep up from the rock-bottom levels of recent years, which is prompting foreign buyers to invest now before the bargains disappear.

Traditional favorites, such as Florida, Arizona, Texas, and Southern California, stand to benefit most as they scoop up the deals still remaining in those preferred destinations.

Canadians — accounting for nearly a quarter of home sales to foreign buyers in the 12 months ended in March, according to the National Association of REALTORS® — will likely continue to lead outside investment in the coming months, thanks to the strength of the Canadian dollar. The gap between Canadian and U.S. home prices has stretched the widest this year than it has been in a decade, providing even more incentive.

House-hunters from Canada heavily favor Florida and Arizona, notes NAR economist Jed Smith, who says, "They buy for vacation purposes and like to have a place in the sun." With that in mind, BMO Financial Group chief economist Sherry Cooper says real estate agents in these "sun and sand" states are aggressively promoting their listings to Canadians via direct mail, e-mail, and newspaper advertising.

While Canadians are the dominant foreign buyers of U.S. homes, buyers from China, Mexico, India, and the United Kingdom together represent 55 percent of international buyers. The Chinese have an affinity for West Coast real estate, while Indians prefer the East Coast and Mexican buyers tend to cluster in Texas.